The Central Bank has issued a press release reiterating its support of ESMA's work to encourage supervisory convergence, particularly in the context of Brexit. This stemmed from a review of the three Opinions issued by ESMA on 13 July 2017 concerning the relocation of entities, activities and functions for investment management and MiFID firms from the United Kingdom as flagged in our previous update.
The Central Bank has reviewed its authorisation processes in light of the issues addressed in the ESMA Opinions, and has identified "process enhancements" in certain areas relating to the authorisation of firms authorised under the UCITS Directive, AIFMD and MiFID to ensure the Central Bank's authorisation and supervisory processes are materially aligned with the Opinions.
The changes to the Central Bank's internal processes will ensure that "in relation to the ESMA Opinions, relevant facts underpinning outcomes are formally documented" during the authorisation process. In short, these process enhancements will lead to updates to the Central Bank application forms which will seek additional detail and supporting documentation being sought in the following areas:
- Details and rationale for the geographical distribution of planned activities;
- Objective justification for delegation arrangements in relation to critical functions;
- Details of due-diligence undertaken during selection process;
- Information on business continuity arrangements;
- Information on how legal risk is assessed;
- Details on delegate remuneration requirements; and
- Details on how best execution obligations continue to be met when dealing with execution venues outside of the EU.
The Central Bank has indicated that until its application forms are updated, the items listed above will be incorporated into the Central Bank's authorisation process (i.e. details will be sought on same notwithstanding that they do not yet form part of the application forms). Accordingly, these will need to be factored into current and future applications.
The Central Bank of Ireland (the Central Bank) strongly supports the work of the European Supervisory Authorities to encourage greater supervisory convergence, particularly in the context of the United Kingdom exiting the European Union.